World Bank Group Auctions Carbon Credits to Businesses

Companies are going ahead and participating in carbon exchange markets despite the signals they may be getting from a change in presidential administrations on Friday. The World Bank Group just allocated $13 million in auction to give them the right to sell their carbon credits at a fixed price.

The Pilot Auction Facility for Methane and Climate Change Mitigation will buy the credits, says a story in the Business Standard. If redeemed, these contracts will reduce the equivalent of 6.2 million tons of carbon dioxide emissions, it adds.

This is third such auction. The first two held in 2015 and 2016 targeted methane emissions from landfills. The one coming up will target nitrous oxide, which results from fertilizers. Both are far more potent than carbon dioxide with regard to their global warming potential.

Winners in the third auction’s received contracts giving them the right to sell carbon credits to the Pilot Auction Facility for $2.10/carbon credit, says the Business Standard.

Critics will argue that the price is too low, meaning it is cheaper to buy credits than to buy new technologies. However, an IFC study says that the global accord signed in Paris will spawn such investments — to the tune of trillions of dollars.